Question

When Cash is received against overdraft from Bank A) There is an Increase in Net Working Capital B) There is an Increase in Gross Working Capital C) There is an Increase in both the Gross and the Net Working Capital D) There is no effect on both the Gross and the Net Working Capital​

Answer 1

Answer:

Option c. There is an increase in both the Gross and the Net Working Capital is the correct alternative.

Explanation:

• Operating income does not change because the same amount is added to each side of the statistics. Therefore, a bank overdraft does not affect a company's operating costs.
• Operating income, also known as cash flow (NWC), is the difference between the current assets of the company — such as cash, accounts receivable / unpaid customer liabilities, inventory of assets and liabilities — and its current liabilities, such as paid accounts and liabilities.